Khoie denies insolvency, vows project completion

Ras Al Khaimah, September 30, 2009

Khoie Properties has denied allegations of insolvency, and instead reiterated its control over Dh1 billion ($272 million) assets in land.

The company also said it had Dh700 million receivables on account of its ownership of the ‘La Hoya Bay’ project in Ras Al Khaimah.

A member of the Khoie Group of Companies, Ras Al Khaimah-based Khoie Properties is the developer of $1.3 billion ‘La Hoya Bay’ project coming up in the emirate.

Khoie Properties' denial comes in light of recent reports highlighting the financial disarray within the company.

'The real estate market as a whole has been affected by the financial crisis, and Khoie Properties has not been exempt from its economic repercussions. In line with this, Khoei seeks to clarify that accusations pertaining to insolvency are baseless, and that it still has the capacity to deliver 'La Hoya Bay’ to investors,' the Khoei statement said.

An examination of figures from the company statement, which can be found in the official website, will reflect that its investors have not lost any of their investments, as there are no profits or losses to absorb until the project is completed and delivered, the statement said.

The company's officials said they were positive on completing construction of the project, given that piling and foundation works have been completed for several buildings.

The developer had recently agreed to the appointment of Rakeen as project managers of the high profile waterfront development and is looking forward to working closely with Rakeen.

'In response to negative publicity that has been surrounding the developer in the recent months, Khoie Properties seeks to shed light on the issue regarding its investment of the Dh288 million, which it has collected from investors,' the statement said.

Within a span of three years, the developer has strategically allocated its funds across the project’s main expenses, with Dh81 million allocated for constructions works, and the architecture, design and engineering consultants; and Dh72 million paid to the RAK Government for the land, it added.

In addition, Dh61 million has been given to global agents as commission, while Dh56 million was given as salaries, advertising, promotions and administration expenses, and Interim Dividend over the course of three years, the statement added.

Finally, Dh18 million was invested towards the ‘Ras Al-Khaimah American School’, the first American international expatriate curriculum school in the northern emirates, which was launched to further enhance the repute of RAK, it said.

The developer also reiterated that it has given its conditional consent for Rakeen’s involvement in order to boost its credibility and build confidence among investors.

Shedding further light on the financial standing of the ‘La Hoya Bay’ project, Khoei revealed that it had procured six plots of land with a total value of Dh302 million from Rakia, for which the developer had issued six cheques of different amounts.

The developer was able to fund the first cheque for Dh72 million for a plot on which it launched the project and subsequently started construction. Controversies arose when the developer was not able to meet the December 2008 land payment of Dh57 million.

With the exception of the outstanding land payments, the developer maintains a healthy, asset-rich balance sheet with zero debt to banks. In addition, global auditors Ernst and Young are currently working on the Khoie Properties 2008 books, following similar audits conducted in 2006 and 2007, the company said.

In lieu of Khoie Properties’ failure to meet its most recent land payment due to the effects of the crisis, plans have been put in place to secure additional funds that will enable the developer to meet its obligations.